Private sale of Lease Purchase

[mllcb42]

@billku

but it seems as if I don’t have to pay the tax upfront.

Usually you don’t have a choice in the matter since the lessor will generally collect sales tax on the buyout

[billku]

@mllcb42

Usually you don’t have a choice in the matter since the lessor will generally collect sales tax on the buyout

GM Financial is not asking for any tax, they’re asking for the buyout amount to be sent to them. Unless they can follow up with a later charge, it seems to not be an initial thing they do.

[billku]

@forbs

This only applies if you sell it to a Dealer.

Since you are private partying a LEASE, you need to turn the Title from the Bank to your name before you can transfer it.

When you get the original title, it’s released to you, and not to the third party, hence you need to get your name on it to sell and pay tax.

The Lease part is important.

Edit : Theoretically, the DMV person can do a big double transaction at once, but what happens when you both get there, wait in line, and they say ‘no!’

Super confusing to me why the DMV person wouldn’t make this distinction. You seem like you know your stuff so it’s worrying, I just can’t find the whole “you pay it then you get it back” anywhere in any of the DMV info, just that you don’t have to pay it if you turn around and sell it within ten days.

[forbs]

@billku

y the DMV person wouldn’t make this distinction.

You know DMV people don’t care? lol

It’s here at the bottom
And it ‘says’ you could avoid taxing, but that hasn’t been the case here except once…So if you succeed, please post here your expirence.

https://www.dmv.ca.gov/portal/handbook/vehicle-industry-registration-procedures-manual-2/transfers/leased-vehicles/

[mllcb42]

@billku

GM Financial is not asking for any tax, they’re asking for the buyout amount to be sent to them.

Are you sure the buyout value they’re quoting doesn’t already include tax?

This is the thread you want to pay attention to in detail:

Third Party Lease Buyout

I recently went through a third-party lease buyout in California. I often see the question on how this is done so I wrote a quick document of my experience: I think the main one I hear is how to avoid paying sales tax twice when selling to a private party. This can be avoided (in CA) by (a) selling you lease within 10 days of acquiring the title from the lessor (b) applying and being approved for a CDTFA-111 from the CDTFA. Note, if you sell to a dealer, the leasing company transfer the ti…

[TypeSH]

@billku

GM Financial is not asking for any tax, they’re asking for the buyout amount to be sent to them. Unless they can follow up with a later charge, it seems to not be an initial thing they do

You will pay the sales tax to the DMV when you go to title it in your name. In CA, the captive bank does not need to collect sales tax, but the DMV damn sure will. Plan on needing to file to request a refund of it. And if the buyer waits too long to register you may be shit out of luck.

[TypeSH]

@billku

I just can’t find the whole “you pay it then you get it back” anywhere in any of the DMV info, just that you don’t have to pay it if you turn around and sell it within ten days

Cause the whole system is designed for retailers with afterthought workarounds for situations like yours that weren’t super common pre pandemic inventory shortage.

‘You don’t have to pay it’ and ‘you don’t ultimately owe it’ are two very different things. They say the latter they don’t really at all say the former even if it sounds like that’s what they’re saying.

[billku]

@TypeSH

You will pay the sales tax to the DMV when you go to title it in your name. In CA, the captive bank does not need to collect sales tax, but the DMV damn sure will. Plan on needing to file to request a refund of it. And if the buyer waits too long to register you may be shit out of luck.

The whole thing was so bizarre. I actually talked to someone on the phone from the CA Tax department who specializes in this area and he unequivocally said I would not have to pay the use tax upfront if I sold the car within ten days of receiving the title. Who knows what would have happened when I actually went in to the DMV to do that. It’s all moot because I heeded the wise advice from this board and just sold it to the dealer, who came a decent amount up since the last time I tried. Lost some money, but I avoided the hassle and didn’t have to pay the disposition. Thanks everyone for your help!!!

[forbs]

I know it after the fact, but what you were planning to do in your OP, I could see 9/10 issues and only 1 where you end up with your money. So be happy you got it all done with a minimal of your investment of time.

[Egp]

I think you are a great example of one who actually listens to the provided advice here. Twice.

[billku]

Appreciate the kind words, thanks. Incorporating the thoughts of people in the know should be an easy thing to do, right?

[mllcb42]

@billku

Incorporating the thoughts of people in the know should be an easy thing to do, right?

Should be